Opinion – Marcia Dessen: How the FGC saved Francisco’s skin and money

Francisco was all excited about the possibility of earning more than savings when a broker offered him an investment in a security issued by a finance company (bill of exchange) with a yield of 120% of the CDI.

At first, he was insecure, as he didn’t know the financial one, and suspicious, thinking why the rate was so high, much higher than that practiced by the big banks. The broker explained to him that the smaller financial institutions do not have the wide distribution network of the large ones. In addition, the credit risk is higher and, for that reason, the profitability is higher, to compensate for the risk.

Francisco doesn’t know what credit risk is and wasn’t willing to risk anything to try to earn more, he prefers safe to uncertain.

After talking to the broker and friends and reading about it, he understood that when he makes an investment in fixed income, such as savings deposits and term deposits (CDB and RDB), for example, he is lending his money to a financial institution, that is, the investor grants credit and becomes the institution’s creditor.

The financial institution (debtor) undertakes to return, on the due date, the initial capital plus the income defined at the time of deposit. Rejected, Francisco asks: “What if the institution doesn’t return my money?”.

Intuitively, he has just discovered what credit risk is, the possibility that the debtor will not honor the commitment to repay the loan – in informal language, defaulting.

Oops, but that’s a risk Francis isn’t willing to take. To try to earn more than savings, he doesn’t want to risk losing all the capital.

This is where the FGC (Credit Guarantee Fund) comes into play. Yes, bank deposits are guaranteed by the FGC. If the issuing institution does not pay, the FGC pays, subject to the rules and limits.

He went to the FGC website (fgc.org.br) to find out everything about this guarantee, he wanted to ensure that his money would be protected and how he would get his money back if the worst case scenario happened.

It found that the products eligible for each person’s warranty will be guaranteed up to a limit of R$250,000. As Francisco still doesn’t have that much money, he was reassured to know that the guarantee is enough to protect all of his money.

As there will be a brokerage intermediating the operation, Francisco wants to know how he proves to be a creditor and to have the right to guarantee if the worst happens. Just present the trading note issued by the broker; if your name is not on the list of creditors, you must also present proof of registration with B3 (former Cetip) and the latest extract from the brokerage firm.

After all this homework, Francisco felt safe and decided to buy the bill of exchange from the finance company. He kept all the documents that will be needed if he needs to claim the guarantee.
Months later, the news came that he did not want to hear, but knew that it could happen: the institution was under intervention.

Downloaded the FGC application to expedite the receipt of money without the need to go to a bank branch. He did everything through the app and in about a week the money was in his bank account.

There were a few months before the bond’s maturity, and Francisco was surprised and happy to receive the initial capital corrected for the period elapsed until the date of the intervention, according to the contracted interest rate. It was better than he expected.

Next week I’ll be back to tell the story of Pedro, who didn’t have a happy ending, like Francisco’s.